What should you know before signing contracts.
A contract should not merely record an agreement. It should protect the business when circumstances change or the other party fails to perform.
Before signing contract, companies should verify at least:
• whether the parties are correctly identified and properly represented;
• whether the subject and deliverables are clearly defined;
• when payment becomes due and which documents confirm performance;
• how goods, services or works will be accepted;
• what happens in case of delay or defective performance;
• whether penalties are proportionate and enforceable;
• how liability is allocated between the parties;
• who owns the intellectual property created under the contract;
• how confidential information is protected;
• when and how the contract may be terminated;
• which law applies and where disputes will be resolved.
Many commercial disputes are not caused by the complete absence of a contract. They arise because the contract contains vague obligations, contradictory provisions or no workable mechanism for dealing with non-performance.
Legal review before signing is usually more efficient than interpreting an incomplete contract after the dispute has already started.
Before signing a contract, we advise our clients to verify the prospective business partner or service provider by searching the company’s name on the official public registers of the Republic of Moldova and consulting the official website of the National Bureau of Statistics, statistica.md, where the company’s financial reports for the most recent years of activity may be available.
